MTT41510 - Particular entities and adjustments: Standard and non-standard members: Overview

MTT operates on a principle of jurisdictional blending. This means that, when calculating the effective tax rate (ETR) and top-up amounts, the ETRs of group members within a territory are aggregated before assessing whether the minimum rate of 15% has been met.

However, there is a further division of group members within a territory. The legislation distinguishes between standard and non-standard members.

A member of a group will be a standard member unless it is:

  • an investment entity, or
  • a minority owned member (see MTT41520).

These non-standard members will have their ETR and top-up amounts calculated separately from the standard members of a group.

For minority owned members, the rules are applied as they are for standard members.

For investment entities, special rules apply (see MTT45100+).

This is set out in section 132(3)(a) of Finance (No.2) Act 2023.

Stateless members

Stateless members (see MTT18010) that do not fall into the categories stated above will be standard members. However, their effective tax rate and top-up amounts will always be calculated separately, because they are treated as being located in a notional territory in which they are the only member.

Joint venture groups

Joint ventures and their subsidiaries are treated as being a separate group for MTT purposes. A joint venture that is neither a minority owned member or an investment entity will still be a standard member, but because it is treated as being in a separate group, its effective tax rate and top-up amounts will be calculated separately from the members of the group which is a partner in the joint venture.

See MTT41600+ for further guidance on joint venture groups.